After yet another week of bitcoin price volatility, including a new historical record, a new options record expiring on March 26 may play a key role in price action and the continuation of that volatility in the coming days.
Options are a contract for the right to buy or sell an asset at a specific price. According to data analysis firm Bybt, there are more than 100,000 BTC – the equivalent of $ 5,574,000,000 (given the $ 55,740 bitcoin price at the time of this writing) – of options set to expire on Friday , March 26, on several major exchanges. This will make it an interesting trading session over the weekend.
This option maturity level will set a new record, breaking the $ 4 billion mark established at the end of January this year. The price of bitcoin on January 31 closed at just over $ 33,000, meaning that bitcoin has appreciated nearly 100 percent since the previous options record expired.
Open options for bitcoin soared this year, more than doubling since the end of last year, from about $ 5 billion to now close to $ 14 billion. In the options, there are call options (bets that the price will go up) and put options (bets that the price will go down). In total, the market is leaning upwards, with a current call-to-put ratio of 1.11. Anything above one is high, that is, at a ratio of 1.18, the market is tilted 11 percent in favor of more benefits to come.
The put options appear to target the $ 40,000 range and the $ 47,500 range, while the call options that expire on Friday are targeting the $ 60,000 range.
If the past is an indication of what is to come, that should entail some short-term volatility, but, ultimately, more upside in the coming weeks after maturity.
This is a guest post by William Clemente III. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.